As a Business analyst at Altec Lansing, Inc, you are assessing an option to purchase an equipment to expand the product line to make computer chips for the company. There are two machines meeting the company's investment criteria, Machine A and Machine B. Machine A costs more than Machine B but has the flexibility to be modified if the demand for computer chips is low while machine B cannot be modified. The following is the financial information about these two machines.

The project with Machine B is worth $20 million today and will be $26 million one year from today with high demand and $14 million with low demand. Machine A can be modified and sold off for $19 million if the demand for computer chip is low. How much more would you be willing to pay for Machine A than Machine B (Assume 6% of interest rate)

What is the risk neutral probability of up movement ? (example of answer format: 15.50%)

How much more would you be willing to pay for Machine A than Machine B ? (example of answer format: $13.50 million)